Spectral MD, an AI company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, announces it has entered into a business combination agreement to combine with Rosecliff Acquisition I (RCLF), a special purpose acquisition company listed on Nasdaq. Upon completion of the transaction, the combined company expects to operate under the expected name Spectral AI and to be listed on Nasdaq under the symbol (MDAI). Following the completion of the proposed transaction, the combined company will operate under the same management team, led by founder and CEO Wensheng Fan with current Spectral MD shareholders rolling 100% of their equity into the transaction. The proposed transaction is expected to provide the combined company with improved access to new sources of capital, accelerate readiness for material potential U.S. federal procurement contracts, and enhance company efforts for broad commercialization opportunities of its AI Wound Diagnostics Technology in the U.S., EU and U.K., including both burn and DFU indications, 3-D wound measurement, and digital wound assessment. The proposed transaction is expected to deliver gross proceeds to Spectral MD in excess of $20M. This includes approximately $4.5M held in Rosecliff’s trust and an expected private placement investment of no less than $15M. The transaction is not subject to any minimum cash condition and neither (a) minimum cash in trust or (b) any minimum PIPE financing is a condition to closing. The proposed transaction values Spectral MD at an estimated enterprise value of $170M, equivalent to approximately 101p per share on the AIM market. The proposed transaction was unanimously approved by the boards of directors of both parties and is supported by irrevocable proxies and voting agreements of existing shareholders of Spectral MD holding greater than 50% of the outstanding shares. The proposed transaction is expected to be completed in Q3, subject to, among other things, the approval by Rosecliff stockholders and Spectral MD shareholders and the satisfaction or waiver of other customary closing conditions. The newly listed entity Spectral AI will maintain its headquarters at the current office of Spectral MD in Dallas, Texas along with current operations in the U.K. and clinical testing in the U.K. and EU. As part of the proposed transaction, Spectral MD intends to cancel the admission of its common stock to trading on the AIM market of the London Stock Exchange, subject to shareholder approval. Following the delisting, all public trading of securities of the company are expected to take place on Nasdaq. Rosecliff’s current stockholders currently hold 8.4M warrants, exercisable at $11.50 per share, which could provide up to an additional $97M of cash to the company depending on the company’s stock price following closing of the transaction. Certain of Rosecliff’s expenses relating to the transaction are capped at $3.25M. Whereas the company’s board of directors is confident the proposed transaction will be consummated on a timely basis, there can be no assurances that the proposed transaction will be completed on the expected timeframe or at all and there can be no certainty in this regard.
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